[Podcast] How Adam Smith influenced Karl Marx

Did you know that Adam Smith, the poster child of free-market capitalism… was also a major influence on Karl Marx?

While Smith is celebrated today as the father of capitalism and Marx as the founder of communism, they are actually part of the same theoretical tradition of political economy.

Unlike the lunatic libertarians and hired guns for capitalism who lay claim to Smith’s legacy today; in his day, he actually aimed to scientifically understand the workings of “commercial society”.

Although the apologists of capitalism don't like to admit it, Smith identified labor – not trade or crafty entrepreneurs – as the true source of a nation's wealth. In so doing, he elaborated on the labor theory of value: the idea that a commodity's worth is determined by the labor required to produce it.

But his analysis was incomplete and inconsistent, leaving him fundamentally unable to understand the mysteries of the burgeoning capitalist world, with all its inequality, chaos and crisis.

By taking Smith's insights and pushing them to their logical conclusions, most notably by distinguishing between labor and labor-power, Marx unlocked the secret of profit: workers produce more value than they receive in wages, with the difference – surplus value – falling to the capitalist.

By combining the labor theory of value with dialectical materialism, Marx revealed the fundamental laws governing capitalism and demonstrated why the system inevitably generates crises and exploitation.

In this episode of Spectre of Communism, Adam Booth (leading member of the Revolutionary Communist Party and co-author of Understanding Marx’s Capital) joins Joe Attard to explore how two seemingly opposed economists are connected.